ACCT200 FINAL
On January 3, 2020, Moss Company acquires $500,000 of Adam Company's 10-year, 10% bonds at a price of $532,090 to yield 9%. Interest is payable each December 31. The bonds are classified as held-to-maturity. Assuming that Moss Company uses the effective-interest method, what is the amount of interest revenue that would be recognized in 2021 related to these bonds?
47,698 = 532,090*9%=47,881 (500,000*10%)-47,881=2,119 532,090-2,119=529,971 529,971*9%=47,698
Barkley Company will receive $800,000 in a future year. If the future receipt is discounted at an interest rate of 8%, its present yalue is $504,136. In how many years is the $800,000 received?
6 years FV/PV = FVF^8%
Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for S600.000 on January 2, 2021. During 2021, Darby Company declared dividends of $100,000 and reported earnings for the year of $400,000. If Blanco Company used the fair value method of accounting for its investment in Darby Company, its Equity Investments (Darby) account on December 31, 2021 should be
600,000
Barber Company will receive $1,500,000 in 7 years. If the appropriate interest rate is 10%, the present value of the $1,500,000 receipt is
769,740 PV = 1,500,000 x .51316 (PVF^7,10%)
What interest rate (the nearest percent) must Charlie earn on a $452,000 investment today so that he will have $1,140,000 after 12 years?
8% FV/PV = FVF^12
Boxer Inc. reported inventory at the beginning of the current year of $360.000 and at the end of the current year of $411.000 If net sales for the current year are $4,429,200 and the corresponding cost of sales totaled $3,321,900, what is the inventory turnover for the current year?
8.62
Micco computes depreciation by the composite method. The composite rate of depreciation (in percent) for these assets is
8.94
Korman Company wishes to accumulate $1,000,000 by May 1, 2028 by making 8 equal annual deposits beginning May 1, 2020 to a fund paying 8% interest compounded annually. What is the required amount of each deposit?
87,051 1,000,000/(FVFOA^8,8% x 1.08)
Reyes Company had a gross profit of $620,000, total purchases of $840,000, and an ending inventory of $480.000 in its first year of operations as a retailer. Reyes's sales in its first year must have been
980,000 Purchases-ending inventory+gross profit
Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense?
A percentage of accounts receivable adjusted for the balance in the allowance
Dodson Company traded in a manual pressing machine for an automated pressing machine and gave $40,000 tash. The old machine cost $465,000 and had a net book value of $355,000. The old machine had a fair value of $300,000. Which of the following is the correct journal entry to record the exchange assurning commercial substance?
A. Equipment debit 340,000 Loss on Disposal debit 55,000 Accumulated Depreciation debit110,000 Equipment credit 465, 000 Cash credit 40,000
1. If you invest $50,000 to earn 8% interest, which of the following compounding approachcs would return the lowest amount after one year?
Annually
Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses that are included as other comprehensive income and as a seperate component of stockholders' equity are
Available-for-sale debt securities
A change in estimate should
Be handled in current and future periods
On January 2, 2020, Indian River Groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2021. Expenditures for the construction were as follows: Indian River Groves borrowed $3,300,000 on a construction loan at 12% interest on January 2, 2020. This loan was outstanding during the construction period. The company also had $12,000,000 in 9% bonds outstanding in 2020 and 2021. What were the weighted-average accumulated expenditures for 2020?
$1,200,000
For 2020, cost of goods available for sale for Tate Corporation was $4,500.000 The gross profit rate on sales was 20%. Sales for the year were $4,000,000 What was the amount of the ending inventory?
$1,300,000
On January 1, 2020, the merchandise inventory of Glaus, Inc. was $1,600,000. During 2020 Glaus purchased $3,200,000 of merchandise and recorded sales of $4.000.000, The gross profit rate on these sales was 25% What is the merchandise inventory of Glaus at December 31, 2020?
$1,800,000
Jamison Company purchased the assets of Booker Company at an auction for $5,600,000. An independent appraisal of the fair value of the assets is listed below: Land $1,900,000 Building 2,800,000 Equipment 2,100,000 Trucks 3,400,000 Assuming that specific identification costs are impracticable and that Jamison allocates the purchase price on the basis of the relative fair values, what amount would be allocated to the Trucks?
$1,866,667
index was 100. Information regarding inventory for subsequent years is as follows: December 31, 2019. Its inventory at that date was $1,100,000 and the relevant price Gross Corporation adopted the dollar-value LIFO method of inventory valuation on What is the cost of the ending inventory at December 31, 2020 under dollar-value LIFO?
$1.207.000
On January 1, 2014, Forrest Company purchased equipment at a cost of $390,000. The equipment was estimated to have a salvage value of S12,000 änd it is being depreciated over eight years under the sum-of-the-years-digits method, What should be the charge for depreciation of this equipment for the year ended December 31, 2021
$10,500
On June 1, 2021, Johnson & Sons sold equipment to James Landscaping Service in exchange for a zero-interest bearing note with a face value of $110,000, with payment due in 12 months. The fuir value of the equipment on the date of sale was $100,000 The amount of revenue to be recognized on this transaction in 2021 is
$100,000 sales revenue and $5,833 interest revenue
Halltown Company purchased a depreciable asset for $600,000. The estimated salvage value is $40,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?
$112,500
Ziegler Corporation purchased 25,000 shares of common stock of the Sherman Corporation for $40 per share on January 2, 2020. Sherman Corporation had 100,000 shares of common stock outstanding during 2021, paid cash dividends of $150,000 during 2021, and reported net income of $500,000 for 2021. Ziegler Corporation should report revenue from investment for 2021 in the amount of
$125,000 =($500,000 x 25%) <<25,000/100,000=25%>>
A trial balance before adjustments included the following: Debit Credit Sales $1,700,000 Sales returns and allowance. $56,000 Accounts receivable 172,000 Allowance for doubtful accounts 3,040 If the estimate of uncollectible accounts is made by taking 10% of gross account receivables, the amount of the adjustment is
$14,160 =(10%*172,000)-3,040
Indian River Groves borrowed $3,300,000 on a construction loan at 12% interest on January 2, 2020. This loan was outstanding during the construction period. The company also had $12,000,000 in 9% bonds outstanding in 2017 and 2021. The interest capitalized for 2020 was:
$144,000
Patton Company purchased $1,500,000 of 10% bonds of Scott Company on January 1, 2021, paying $1,410,375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these honds to maturity. For the year ended December 31, 2021, Patton Company should report interest revenue from the Scott Company bonds of:
$155,283 =(1,410,375*11%*1/2)+(1,410,375+2,571)*11%*1/2
1Falcon Company purchased a depreciable asset for $175,000. The estimated salvage value is $14,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?
$161,000
Morgan Corporation purchased a depreciable asset for $600,000 on January 1, 2018. The estimated salvage value is $60,000, and the estimated useful life is 9 years. The straight-line method is used for depreciation. In 2021. Morgan changed its estimates to a total useful life of Syears with a salvage value of $90,000 What is 2021 depreciation expense?
$165,000
Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 7.200 units that cost $12 each. During the month, the company made two purchases: 3,000'units at $13 each and 12.000 units at $13.50 each. Checkers also sold 12,900 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month?
$167,055
Grover Corporation purchascd a truck at the beginning of 2020 for $109,200. The truck is estimated to have a salvage value of $4,200 und a useful life of 120,000 miles. It was driven 21,000 miles in 2020 and 29,000 miles in 2021. What is the depreciation expense for 2020?
$18,375
Morgan Manufacturing Company has the following account balances at year end: Office supplies $ 4,000 *Raw materials 27,000 *Work-in-process 59,000 *Finished goods 97,000 Prepaid insurance 6,000 What amount should Morgan report as inventories in its balance sheet?
$183,000
Patton Company purchased $1,500,000 of 10% bonds of Scott Company on January 1, 2021, paying $1,410,375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Patton Company should increase its Debt Investments account for the Scott Company bonds by
$2,571 =(1,410,375*11%*1/2)-(1,500,000*10%*1/2)
Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year: If the ending inventory is to be valued at the lower-of-cost-or-market, what is the cost- to-retail ratio?
$222,500 + $313,500
Given the acquisition cost of product Z is $27, the net realizable value for product Z is $24 the normal profit for product Z is $2, and the market value (replacement cost) for product Z is $25, what is the proper per unit inventory value for product Z applying LCM?
$24
The following data concering the retail inventory method are taken from the financial records of Welch Company. The ending inventory at retail should be
$240.000
On February 1, 2020, Nelson Corporation purchased a parcel of land as a factory site for $320,000 An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2020. Costs incurred during this period are listed below: Demolition of old building $ 20,000, Architect's fees 435,000, Legal fees for title investigation and purchase contract 5,000, Construction costs 1,390,000 (Salvaged materials resulting from demolition were sold for $10,000
$335,000 and $1,425,000.
Barton Corporation acquires a coal mine at a cost of SI,800,000 Intangible development costs total $360,000. After extraction has occured, Barton must restore the property (estimated fair value of the obligation is $180,000), after which it can be sold for $210.000 Barton estimates that 6,000'tons of coal can be extracted. What is the amount of depletion per ton?
$355
Worthington Chandler Company purchased equipment for $40,000 Sales tax on the purchase was $2,400. Other costs incurred were freight charges of S600, repairs of $350 for damage during installation, and installation costs of $6755 What is the cost of the equipment?
$43,675
Winsor Co. records purchases at net amounts, On May 5 Winsor purchased merchandise on account, $80,000, terms 2/10, n/30. Winsor returned $6,000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. The amount to be recorded as a purchase return is
$5,880 6,000*(100%-2%)
Steinert Company has the following items at year-end: Cash in bank $45,000 Petty cash 500 Short-term paper with maturity of 2 months 8,200 Postdated checks 2,100 Steinert should report cash and cash equivalents of
$53,700 =(45,000+500+8,200)
Risers Inc. reported total assets of $6,400,000 and net income of $510,000 for the current year. Risers determined that inventory was understated by $138.000 at the beginning of the year and $60,000 át the end of the year. What is the corrected amount for total assets and net income for the year?
$6,460,000 and $432,000
Blanco Company purchased 200 of the 1,000 outstanding shares of Darby Company's common stock for $600,000 on January 2, 2021. During 2021, Darby Company declared dividends of $100,000 and reported earnings for the year of $400,000. If Blanco Company uses the equity method of accounting for its investment in Darby Company, its Equity Investments (Darby) account at December 31, 2021 should be
$660,000 =600,000-(100,000*20%)+(400,000*20%) <<200/1000=20%>>
Huffman Corporation constructed a building at a cost of $30,000,000. Weighted-average accumulated expenditures were $12,000,000, actual interest was $1,200,000, and avoidable interest was $600,000. If the salvage value is $2,400,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is
$705,000
Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation and training for a total cost of $144,000 on March 15, 2021. Estimated standalone fair values of the equipment, installation, and training are $90,000, $60,000, and $30,000 respectively. The transaction price allocated to equipment, installation and training is
$72,000, $48,000 and $24,000 respectively.
Equestrain Roads accepted a customer's $100,000 zero-interest-bearing six-month note in a sales transaction. The product sold normally sells for $92,000. If the sale was made on June 30, how much interest revenue from this transaction would be recorded for the year ending December 31?
$8,000 =(100,000-92,000)
Lankton Company has the following account balances at year-end: Accounts receivable $90,000 Allowance for doubtful accounts 4,800 Sales discounts 3200 Lankton should report accounts receivable at a net amount of
$85,200 =(90,000-4,800)
Glen Inc. and Armstrong Co. have an exchange with no commercial substance. The asset given up by Glen Inc. has a book value of $72,000 and a fair value of $90.000. The asset given up by Armstrong Co. has a book value of $120,000 and a fair value of $114,000. Boot of $24,000 is received by Armstrong Co. What amount should Armstrong Co. record for the asset received?
$90,000
The inventory account of Irick Company at December 31, 2020, included the following items: Based on the above information, the inventory account at December 31, 2020, should be reduced by
$90,800
Bell Inc. took a physical inventory at the end of the year and determined that $780,000 of goods were on hand. In addition, Bell, Inc. determined that $60,000 of goods that were in transit that were shipped fo.b. shipping point were actually received two days after the inventory count and that the company had $90,000 of goods out on consignment. What amount should Bell report as inventory at the end of the year?
$930.000
Becky had net sales (all on account) in 2020 of $8,000,000. At December 31, 2020, before adjusting entries, the balances in selected accounts were: accounts receivable $1,000,000 debit, and allowance for doubtlul accounts $2,000 debit. Becky estimates that 3% of its accounts receivable will prove to be uncollectible. What is the net amount expected to be collected of the receivables reported on the financial statements at December 31, 2020?
$970,000 [1,000,000-(1,000,000*3%)]
45. Marle Construction enters into a contract with a customer to build a warchouse for $950,000 on March 30, 2021 with a performance bonus of $50.000 if the building is completed by July 31, 2021. The bonus is reduced by $10,000 each week that completion is delayed. Marle commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: The transaction price for this transaction is
$995,000
Landis Company purchased $3,000,000 of 8%, 5-year bonds from Ritter, Inc. on January 1, 2021, with interest payable on July 1 and January 1. The bonds sold for $3,124,740 at an effeetive interest rate of 7%. Using the effective-interest method, Landis Company decreased the Available-for-Sale Debt Securities account for the Ritter, Inc bonds on July 1, 2021 and December 31, 2021 by the amortized premiums of $10,620 and $10,980, respectively. At April 1, 2022, Landis Company sold the Riter bonds for $3,090,000. After accruing for interest, the carrying value of the Ritter bonds on April 1, 2022 was $3,097,440. Assurning Landis Company has a portfolio of Available-for-Sale Debt Securities, what should Landis Company report as a gain or loss on the bonds?
($7,440) =3,090,000-3,097,440
Niles Co. has the following data related to an item of inventory: Inventory, March 1 400 units at $2.10 Purchase, March 7 1,400 units at $2.20 Purchase, March 16 280 units at $2.25 Inventory, March 31 520 units The value assigned to ending inventory if Niles uses LIFO is
1,104 FISH
Altman Company will invest $900,000 today. The investment will earn 6% for 5 years, with no funds withdrawn. In 5 years, the amount in the investment fund is
1,204,407 =PV x FVF^5,6%
Winsor Co. records purchases at net amounts. On May 5 Winsor purchased merchandise on account, $80,000, terms 2/10, n/30. Winsor returned $6.000 of the May 5 purchase and received credit on account. At May 31 the balance had not been paid. By how much should the account payable be adjusted on May 31?
1,480
John Jones won a lottery that will pay him $4,000,000 after twenty years. Assuming an appropriate interest rate is 5% compounded annually, what is the present value of this amount?
1,507,560 PV= FV x PVF^20,5%
Micco computes depreciation by the composite method. The composite life (in years) for these assets is
10.0
Arlington Company is constructing a building. Construction began on January I and was June 1, and $8,000,000 on December completed on December 31. Expenditures were $6,400,000 on March 1, S5,280,000 on 31. Arlington Company borrowed $3,200,000 on January 1 on a 5-ycar, 12% note to help finance construction of the building. In addition, the company had qutstanding all year a 10%, 3-year, $6,400,000 note payable and an 11 4-year, $12,000,000 note payable. What is the weighted-average interest rate used for interest capitalization purposes?
10.65%
In preparing its bank reconciliation for the month of April 2020, Henke, Inc. has the following information available. Balance per bank statement, 4/30/20 $102,420 NSF check retumed with 4/30/20 bank statement 1,350 Deposits in transit, 4/30/20 15,000 Outstanding checks, 4/30/20 15,600 Bank service charges for April 60 What should be the correct balance of cash at April 30, 2020?
101,820 =(102,240+15,000-15,600)
Charlie Corp. is purchasing new equipment with a cash cost of $300,000 for an assembly line. The manufacturer has offered to accept $68,900 payment at the end of each of the next six years. How much interest will Charlie Corp. pay over the term of the loan?
113,400 (total payments 413,400 (6x68,900) less cash cost of equipment 300,000)
James leases a ski chalet to his best friend, Janet. The lease term is five years with $30,000 annual payments due at the beginning of each year. What is the present value of the payments discounted at 8% per annum?
129,364 30,000 x PVFAD^5,8%
If $12,000 is deposited annually starting on January 1, 2020 and it earns 8%, what will the balance be on December 31, 2027?
137,851 12,000 x FVFOA^8,8% x 1.08
An amount is deposited for eight years at 8%. If compounding occurs quarterly, then the table value is found at
2% for 32 periods
In 2020, Bargain Shop reported net income of $5.7 billion, net sales of $175 billion, and average total assets of $75 billion. What is Bargain shop's asset turnover?
2.33 times 175/75
A markup of 25% on cost is equivalent to what markup on selling price?
20%
June Corp. sells one product and uses a perpetual inventory system. The beginning inventory consisted of 80 units that cost $20 per unit. During the current month, the company purchased 480 units at $20 each. Sales during the month totaled 360 units for $43 each. What is the number of units in the ending inventory?
200 units
On February 1, 2020, Henson Company factored receivables with a carrying amount of $700,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Henson factors the receivables on a without recourse basis. The loss to be reported is
21,000 =(700,000x3%)
On February 1, 2020, Henson Company factored receivables with a carrying amount of $700,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February. Assume that Henson factors the reccivables on a with recourse basis. The recourse obligation has a fair value of $3,500. The loss to be reported is
24,500 =[(100,000*3%)+3,500]
Niles Co. has the following data related to an item of inventory: Inventory, March 1 400 uzits a $2 10 Purchase, March 7 1,400 units a $2.20 Purchase, March 16 280 units @ 2.25 Inventory, March 31 520 units The value assigned to cost of goods sold if Niles uses FIFO is
3,392
During the year, Kiner Company made an entry to write off a $32,000 uncollectible account. Before this entry was made, the balance in accounts receivable was $400,000 and the balance in the allowance account was $36,000. The accounts receivable amount expected to be collected after the write-off entry was
364,000 =(400,000-36,000)
On January 1, 2017, Haley Co. issued ten-year bonds with a face amount of $5,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. Present value factors are as follows: At 8% At 10% Present value of 1 for 10 periods 0.463 0.386 Present value of an ordinary annuity of 1 for 10 periods 6.710 6.145 The total issue price of the bonds was
4,388,000 5,000,000x0.386=1,930,000 + 6.145x400,000(5,000,000*8%)=2,458,000
AG Inc. made a $25,000 sale on account with the following terms: 2/10, n/30. If the company uses the net method to record sales made on credit, what is/are the debit(s) in the journal entry to record the sale?
Debit Accounts Receivable for $24,500
AG Inc. made a S25,000 sale on account with the following terms: 1/15, n/30. If the company uses the gross method to record sales made on credit, what is/are the debit(s) in the journal entry to record the sale?
Debit Accounts Receivable for $25,000
Which of the following is included in the normal journal entry to record the collection of accounts receivable previously written off when using the allowance method?
Debit Accounts Receivable, credit Allowance for Doubiful Accounts
What is the normal journal entry when writing-off an account as uncollectible under the allowance method?
Debit Allowance for Doubtful Accounts, credit Accounts Receivable
What is the normal journal entry for recording bad debt expense under the allowance method?
Debit Bad Debt Expense, credit Allowance for Doubtful Accounts
Which of the following disclosures is not required in the financial statements regarding depreciation?
Details demonstrating how depreciation was calculated
The acquisition cost of a certain raw material changes frequently. The book value of the inventory of this material at year end will be the same if perpetual records are kept as it would be under a periodic inventory method only if the book value is computed under the
FIFO method
At December 31, 2021, Atlanta Company has an equity portfolio valued at $160,000. Its cost was $132,000. If the Securities Fair Value Adjustment has a debit balance of $8,000, which of the following journal entrics is required at December 31, 2021?
Fair Value Adjustment debit 20,000 Unrealized Holding Gain or Loss-Income credit 20,000
Which table would you use to determine what amount was deposited three years ago to provide $1,000 today?
Future value of 1 or present value of 1
If Jethro wanted to save a set amount each month in order to buy a new pick-up truck when the new models are next available, which time value concept would be used to determine the monthly payment?
Future value of an ordinary annuity
Peter invests $100,000 in a 3-year certificate of deposit earning 3.5% at his local bank. Which time value concept would be used to determine the maturity value of the certificate?
Future value of one
Which of the following accounts is credited in the loss method of writing down of inventory to its net realizable value if no allowance account in ued?
Inventory
At a lump-sum cost of $69.000, Pratt Company recently purchased the following items for resale:
M 3.45, N 11.04, O 5.52
When inventory declines in value below original (historical) cost, and this decline is considered other than temporary, what is the maximum amount that the inventory can be valued at?
Net realizable value
On December 1, 2020, Richards Company sold some machinery to Fleming Company. The two companies entered into an installment sales contract at a predetermined interest rate. The contract required four equal annual payments with the first payment due on December 1, 2020, the date of the sale. What time value of money concept is appropriate for this situation?
Present value of an annuity due of 1 for four periods
What is the rationale behind the ceiling when applying the lower-of-cost-or-market method to inventory?
Prevents overstatement of the value of obsolete or damaged inventories
Which of the following is included in inventory costs?
Product costs
To address inconsistencies and weaknesses in revenue recognition, a comprehensive revenue recognition standard was developed entitled the
Revenue from Contracts with Customers
What is a LIFO reserve?
The difference between the LIFO inventory and the amount used for internal reporting purposes.
Which of the following most accurately reflects the concept of depreciation as used in accounting?
The process of allocating the cost of tangible assets to expense in a systermatic, and rational manner to those periods espected to benefit fiom the use of the asset.
Unrealized holding gains or losses which are recognized in income are from debt securities classified as
Trading
During 2020, Larue Co., a manufacturer of chocolate candies, contracted to purchase 250.000 pounds of cocoa beans at $4.00 per pound, delivery to be made in the spring of 2021. Because a record harvest is predicted for 2021, the price per pound for cocoa beans had fallen to $3.30 by December 31, 2020. Of the following journal entries, the one which would properly reflect in 2020 the effect of the commitment of Larue Co. to purchase the 250,000 pounds of cocoa is
Unrealized Holding Gain or Loss-Income 175,000 Estimated Liability on Purchase Commitments 175,000
On its December 31, 2020, balance sheet, Trump Company reported its investment in equity securities, which had cost $600,000, at fair value of $560,000. At December 31, 2021, the fair value of the securities was $585,000. What should Trump report on its 2021 income statement as a result of the increase in fair value of the investments in 2021?
Unrealized gain of $25,000 =(560,000-585,000)
Seadrill Engineering licensed software to oil-drilling firms for 5 years. In addition to providing the software, the company also provides consulting services and support to ensure smooth operation of the software. The total transaction price is $420,000. Based on standalone values, the company estimates the consulting services and support have a value of $120,000 and the software license has a value of $300,000. Assuming the performance obligations are not interdependent, the journal entry to record the transaction includes
a credit to Sales Revenue for $300,000 and a credit to Unearmed Service Revenue of $120,000.
Watt Company purchased $300,000 of bonds for $315,000. If Watt intends to hold the securities to maturity, the entry to record the investment includes
a debit to Debt Investments at $315,000
Hcld-to-maturity securities are reported at
acquisition cost plus amortization of a discount
Partial satisfaction of a multiple performance obligation is reported on the balance sheet as
contract asset
P& G Auto Parts sells parts to AAA Car Repair during 2021. P&G offers rebates of 2% on purchases up to S60,000 and 3% on purchases above $60,000 if the custonmer's purchases for the year exceed $200,000. In the past, AAA normally purchases $300,000 in parts during a calendar year. On March 25, 2021, AAA Car Repair purchased $74,000 of parts. The journal entry to record the purchase includes a
credit to Sales Revenue for $71,780
Ôn November I, 2021, Green Valley Farm entered into a contract to buy a $150,000 harvester from John Deere. The contract required Green Valley Farm to pay $150,000 in advance on November 1, 2021. The harvester (cost of $110,000) was delivered on November 30, 2021. The journal entry to record the contract on November 1, 2021 includes a
credit to Unearned Sales Revenue for $150,000
On April 2, Kelvin sold $40,000 of inventory items on credit with the terms 1/10, net 30. Payment on $24,000 sales was received on April 8 and the remaining payment on $16,000 sales was received on April 27. Assuming Kelvin uses the net method of accounting for sales discounts, the entry recorded on April 27 would include
debit to Accounts Receivable and credit to Sales Discounts Forfeited for $160 (16,000*1%)
An available-for-sale debt security is purchased at a discount. The entry to record the amortization of the discount includes a
debit to Debt Investments
On November 1, 2021, Green Valley Farm entered into a contract to buy a $150,000 November 30, 2021. The journal entry to record the delivery of the equipment includes a advance on November 1, 2021. The harvester (cost of $110,000) was delivered on harvester from John Deere. The contract required Green Valley Farm to pay $150,000 in
debit to Unearned Sales Revenue for $150,000
If the parent company owns 90% of the subsidiary company's outstanding common stock, the company should generally account for the income of the subsidiary under the
equity method
The first step in the process for revenue recognition is to
identify the contract with customers
The second step in the process for revenue recognition is to
identify the separate performance obligations in the contract
Lamar Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should
include a credit to the equipment accumulated depreciation account.
To produce an inventory valuation which approximates the lower of cost or market using the conventional retail inventory method, the computation of the ratio of cost to retail should
include markups but not markdowns.
Elkins Corporation uses the perpetual inventory and the gross method. On March 1, it purchased $50,000 of inventory, terms 2/10, n/30. On March 3, Elkins returned goods that cost $5,000. On March 9, Elkins paid the supplier. On March 9, Elkins should credit
inventory for $900 (50,000-5,000)x2%
The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its
invoice price
The designated market value
is always the middle value of replacement cost, net realizable value, and net realizable value less a normal profit margin.
A contract
is an agreement that creates enforceable rights and obligations
When an investor's accounting period ends on a date that does not coincide with an interest receipt date for bonds held as an investment, the investor must
make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the amount of interest accrued since the last interest receipt date
When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the
market price of the stock
If a unit of inventory has declined in value below original cost, but the market value exceeds net realizable value, the amount to be used for purposes of inventory valuation
net realizable value
The floor to be used in applying the lower-of-cost-or-market method to inventory is determined as the
net realizable value less normal profit margin
When a company uses LIFO for external reporting purposes and FIFO for internal reporting purposes, an Allowance to Reduce Inventory to LIFO account is used. This account should be reported
on the balance sheet in the Current Assets section
The converged standard on revenue recognition
recognizes and measures revenue based on changes in assets and liabilities
On January 15, 2021, Bella Vista Company enters into a contract to build custom equipment for ABC Carpet Company. The contract specified a delivery date of March 1. The equipment was not delivered until March 31 The contract required full payment of $75,000 30 days after delivery. The revenue for this contract should be
recorded on March 31, 2021
Unconditional rights to receive consideration because a performance obligation has heen satisfied are
reported as a receivable on the balance sheet
Disclosure related to revene
requires disclosure of remaining performance obligations
Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses are
securities where a company has holdings of less than 20%
When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to
that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made
The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at
the fair value of the asset given up, and a gain or loss is recognized
If an annuity due and an ordinary annuity have the same number of equal payments and the same interest rates, then
the present value of the annuity due is greater than the present value of the ordinary annuity
